ANALYSIS-No quick fix for Britain's overloaded infrastructure

LONDON, March 18 (Reuters) - After heavy rainfall, rawsewage gushes into the River Thames from a network of danksewers beneath the streets of London.

A Victorian-era problem that has never been fixed, thecobweb-laced tunnels just metres from a new underground railwaystation at Blackfriars underscore Britain's infrastructurebacklog.

The need for a new "super sewer" for Europe's financialcapital was identified as far back as 1989 but privatisedutility Thames Water lacked government funding and had morepressing priorities, such as cleaner drinking water.

If the new sewer project gets the go-ahead from planningauthorities, preliminary work is due to start in 2015 with themain tunnelling a year after that.

The kind of project that Britain's economy desperately needsas it tries to find ways to grow, the proposed 4.1 billion-pound($6.2 billion) pipe is planned to run 25 km (16 miles) toredirect sewage overflow away from the river when it is finishedin 2023.

For now, workers known as "flushers" struggle to keep theflow of waste clear from used wet-wipes and congealed cookingfat.

Unblocking Britain's infrastructure backlog is one of themajor challenges in an economy threatened again with recession,more than five years since the financial crisis began.

The government's austerity push represents just the latesthurdle to getting major projects going. Investors have long hadto contend with a lack of clarity on rules for private investorsand the complexities of the country's planning laws.

Finance minister George Osborne is expected to announce onlysmall tweaks to public spending his annual budget on Wednesday.

Resisting calls to borrow more to invest in projects thatcould boost growth, he is likely to say extra capitalexpenditure will have to be offset by cuts to day-to-dayspending.

Business groups are resigned to slow progress on bigprojects. They are pushing instead for shorter-term measures inthis week's budget to boost housing and road repairs as quickerways to inject growth into the economy.

DIGGING DEEP

Government officials, who say they are trying to catch upafter decades of underinvestment, point to a nationalinfrastructure plan, listing more than 500 projects worth 310billion pounds between now and 2050. They also stress the launchof government guarantees to help get projects going.

On Monday, the government accepted proposals by a formerdeputy prime minister, Michael Heseltine, to devolve someinvestment funding to local authorities, a move which he sayscould boost growth. Details on how much money will be divertedaway from central government will be decided in the summer.

In London, there are signs of activity. Giant equipment isdigging deep under the city - turning up mediaeval skeletons inthe process - to build a new train line through the capital.

Describing itself as Europe's largest construction project,Crossrail has taken decades to come to fruition and is scheduledto open in 2018.

The government says annual spending on infrastructure hasbeen higher since it took office than under the previous Labourone, taking into account private as well as public investment.

But in terms of public spending alone, net investment hasplunged from 48.6 billion pounds in the 2009 fiscal year to 28.7billion pounds two years later.

"There's a can-do ethos about investment in those countriesand alet's-try-and-prevent-it-or-make-it-as-difficult-as-possibleethos here," said Kevin Cammack, an analyst at CenkosSecurities.

For most of the period since the 1970s, British governmentinvestment as a percentage of GDP has lagged that of France,United States, Germany and Canada according to data from theOrganization for Economic Co-Operation and Development.

"We've not been heavy investors in infrastructure in thiscountry. But we are at a point now where our economy needs theseinvestments brought forward quickly," said Lee Hopley, chiefeconomist at EEF, a group representing British manufacturers.

David Marshall at John Laing Infrastructure Fund, whichinvests in public-private ventures, said the Dutch governmentcan sign off on a project eight weeks after announcing apreferred bidder. In Britain, it can take up to two years, hesaid.

MORE ENERGY NEEDED IN POWER

One area of pressing concern is energy.

After a decade of internal policy wrangling - which hasoccurred elsewhere in Europe - the government hopes to pass alaw within a year to fix Britain's future mix of nuclear, fossilfuel and renewable energy sources, as well as guaranteed pricesfor utilties that will reassure them about future profits.